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You make decisions every day on the direction of your business, but while you work hard to scale your revenue, are you also scaling your equity value? Or could that value be eroding behind your back?
With so many strategic decisions and opportunities available, choosing the best one and when to take them can be difficult. Equity value can be eroded very quickly, after which it takes a long time to build back up, so you want to be as prepared as possible to avoid wrong turns along the way.
In these slides we share our knowledge on when and if you should be considering the following opportunities as part of your growth strategy:
- New market entry
- Leveraging IP
- Inorganic growth
View these slides to find out our advice on assessing the risks and rewards of your options.
Equity and growth – do both Buyers like xyz, consider in your decisions.
Today we will cover: Growth = success What buyers look for & your decisions Q&A
Growth = success Opposite = stagnate and decline Growth results in good outcomes What is your aim? Dividends or Sale? Don’t have to decide yet Sale ready business vs. bad decisions Can keep options open by understanding buyer’s needs (scaling smart)
What do buyers look for? We talk to buyers and produce Buyers Report 4 Key areas they look for Trade buyer vs financial investor
Buyers want Confidence Consistency is y-o-y growth in revenue and profits – they don’t expect magic Pipeline also builds confidence
Any firm can be sold Small end unlikely to get premium price Mega deals happen, but few of them Good deals in the middle, $20m is optimum Affected by circumstances, but generally most firms would benefit from more scale
Focus is easier for buyers to deal with Service Sector Geography Bruce’s story of Netherlands and Spanish firm, harder to find buyers
IP in broad sense All about leverage, ability to scale E.g. Accenture Also reduces risk Types of IP buyers value
How does that affect me? No right or wrong answer, 4 options to look at
No right or wrong [repetitive?] Geographic market and industry market Greenfield market is a draw, but difficult, easier to sell to people you already know Exhausted your current market? Don’t underestimate the difficulty, may expand too early (especially to geographies) Significant financial costs, significant time cost (seen many fail), complication cost of operations New industry sector costs are slightly better but still significant. Management distraction can be the biggest cost. Not saying ‘never’, we can help you with how to do it Buyers view on geographic dispersion – less attractive if small and requires wider buy-in from the buyer Potentially very valuable because demonstrates scalability of your model
IP – deliver more with less, leverage Focus on the right IP – aligned to market and client needs, senior responsibility IP is value – faster on-boarding, profits, leverage, scalability. Only question is where to focus IP is beneficial to you and to the buyer
Acquisition is seductive, but have you thought of these strategic/synergy questions? What about capability and capacity to do the deal? Integration also takes time, and you likely can’t sell yourself for 2 years Don’t want to sound negative, acquisition can be great but needs careful consideration
More services to sell is helpful, more revenue, longer clients, re-engage clients E.g. recent client, [new analogy needed, see script] Diversifying, but still quite focused. Easier to integrate, doesn’t need multiple signoffs, don’t make it difficult by adding red flags for a buyer Other considerations, margins, resources. But try not to raise eyebrows, want to be easy for buyer to understand.